HoltesThoughts: Georgist Definitions of Labor, Capital and Land

Introduction

In trying to figure out what Henry George was talking versus what his many followers say he was saying. I have to look at his definitions, because that is where he starts. He wasn't really using new definitions. But in some cases he was unspinning what most folks were pedalling. In this little exercise I'm going to focus on his three major terms; Land, Labor & Capital In that order.

Land

He defines Land:

"The term land does not simply mean the surface of the earth as distinguished from air and water—it includes all natural materials, forces, and opportunities. It is the whole material universe outside of humans themselves. Only by access to land, from which their very bodies are drawn, can people use or come in contact with nature." [Page 20]

Labor

George pretty much dispenses with most of the Bull and defines Labor as such:

"Wages are the portion of production that goes to labor. Therefore, the term wages includes all rewards for such exertion." [Page 18 paragraph 3]

Then he defines wages:

"Wages, in the economic sense, simply means the return for the exertion of labor."

"Whatever is received as the result or reward of exertion is 'wages.'" Henry also had to explain what Labor and wages are not:

"Wages are not drawn from capital. On the contrary, wages are drawn from the product of the labor for which they are paid." [page 18 Wages and Capital]

Wages are drawn from production.

Wealth and Capital

And part of the argument for why wages are drawn from labor, hinges on what Capital is not:

"they claim, without reservation, that capital limits labor. Then they state that capital is stored up or accumulated labor. If we substitute this definition for the word capital, the proposition refutes itself."

If Capital were a store of labor then labor can't come from Capital. The fact that these folks argue this way just shows they were fascists then. The fact they still argue this nonsense in some circles is evidence they are just conning us. But as Henry George notes, the economists and folks advertising for Capitalism aren't precise. He notes:

"The idea of capital, on the other hand, is so beset with ambiguities that it is difficult to determine a precise use of the term." [page 19]

Wealth And Capital

Therefore he starts by saying what Capital is not, drawing on the writings of Adam Smith and other economists.

"nothing properly included as either land or labor can be called capital."

In order to define Capital he has to define "wealth":

"Wealth, then, may be defined as natural products that have been secured, moved, combined, separated, or in other ways modified by human exertion to fit them for the gratification of human desires." [P & P Ch2]

Capital

This leads to an economic definition of capital:

"Capital is ... [that] part of wealth—that [is] devoted to aid production." [P & P Ch2]

He further refines that definition to be:

Capital is "wealth in the course of exchange."

That is, it is wealth derived from some sort of production, transformation, etc... that is being used to help produce more wealth.

Discussion

The reason for these definitions is to help when differentiating between the rules for his Land Value Taxation. If Wages and Capital are to be excluded from taxation -- then we have to be clear what is meant by those terms.

HoltesThoughts

Thursday, September 3, 2015

Georgist Definitions of Labor, Capital and Land